exv10w1






Exhibit
10.1



CREDIT AGREEMENT




dated as of August 20, 2008




among




SMITH INTERNATIONAL, INC.,




The Lenders From Time to Time Party Hereto




and




FORTIS BANK SA/NV, NEW YORK BRANCH,

as Administrative Agent




WELLS FARGO BANK, N.A.,

as Syndication Agent




CALYON NEW YORK BRANCH, DNB NOR BANK ASA and THE ROYAL BANK OF SCOTLAND PLC,

as Co-Documentation Agents




and




DNB NOR BANK ASA and FORTIS BANK SA/NV, NEW YORK BRANCH,

as Co-Lead Arrangers and Joint Bookrunners









 









 











TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I Definitions
	 	 	1	 
	SECTION 1.01 Defined Terms
	 	 	1	 
	SECTION 1.02 Classification of Loans and Borrowings
	 	 	13	 
	SECTION 1.03 Terms Generally
	 	 	13	 
	SECTION 1.04 Accounting Terms; GAAP
	 	 	14	 
	ARTICLE II The Credits
	 	 	14	 
	SECTION 2.01 Commitments
	 	 	14	 
	SECTION 2.02 Loans and Borrowings
	 	 	14	 
	SECTION 2.03 Requests for Borrowings
	 	 	15	 
	SECTION 2.04 [Intentionally Left Blank]
	 	 	16	 
	SECTION 2.05 Funding of Borrowings
	 	 	16	 
	SECTION 2.06 Interest Elections
	 	 	16	 
	SECTION 2.07 Termination of Commitments
	 	 	18	 
	SECTION 2.08 Repayment of Loans; Evidence of Debt
	 	 	18	 
	SECTION 2.09 Prepayment of Loans
	 	 	19	 
	SECTION 2.10 Fees
	 	 	20	 
	SECTION 2.11 Interest
	 	 	20	 
	SECTION 2.12 Alternate Rate of Interest
	 	 	21	 
	SECTION 2.13 Increased Costs
	 	 	21	 
	SECTION 2.14 Break Funding Payments
	 	 	22	 
	SECTION 2.15 Taxes
	 	 	23	 
	SECTION 2.16 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
	 	 	24	 
	SECTION 2.17 Mitigation Obligations; Replacement of Lenders
	 	 	25	 
	SECTION 2.18 Defaulting Lender
	 	 	26	 
	ARTICLE III Representations and Warranties
	 	 	27	 
	SECTION 3.01 Organization; Powers
	 	 	27	 
	SECTION 3.02 Authorization; Enforceability
	 	 	27	 
	SECTION 3.03 Governmental Approvals; No Conflicts
	 	 	27	 
	SECTION 3.04 Financial Condition
	 	 	28	 
	SECTION 3.05 Properties
	 	 	28	 
	SECTION 3.06 Litigation and Environmental Matters
	 	 	28	 
	SECTION 3.07 Compliance with Laws and Agreements
	 	 	29	 
	SECTION 3.08 Investment Company Status
	 	 	29	 
	SECTION 3.09 Taxes
	 	 	29	 
	SECTION 3.10 ERISA
	 	 	29	 
	SECTION 3.11 Disclosure
	 	 	29	 
	ARTICLE IV Conditions
	 	 	30	 
	SECTION 4.01 Effective Date
	 	 	30	 
	ARTICLE V Affirmative Covenants
	 	 	31	 
	SECTION 5.01 Financial Statements; Ratings Change and Other Information
	 	 	31	 
	SECTION 5.02 Notices of Material Events
	 	 	32	 
	SECTION 5.03 Existence; Conduct of Business
	 	 	32	 
	SECTION 5.04 Payment of Obligations
	 	 	33	 
	SECTION 5.05 Maintenance of Properties; Insurance
	 	 	33	 
	SECTION 5.06 Books and Records; Inspection Rights
	 	 	33	 






 i









 




TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	SECTION 5.07 Compliance with Laws
	 	 	33	 
	SECTION 5.08 Use of Proceeds
	 	 	33	 
	SECTION 5.09 Financial Covenants
	 	 	33	 
	ARTICLE VI Negative Covenants
	 	 	34	 
	SECTION 6.01 Subsidiary Indebtedness
	 	 	34	 
	SECTION 6.02 Liens
	 	 	34	 
	SECTION 6.03 Fundamental Changes
	 	 	35	 
	SECTION 6.04 Transactions with Affiliates
	 	 	35	 
	ARTICLE VII Events of Default
	 	 	36	 
	ARTICLE VIII The Administrative Agent
	 	 	38	 
	ARTICLE IX Miscellaneous
	 	 	40	 
	SECTION 9.01 Notices
	 	 	40	 
	SECTION 9.02 Waivers; Amendments
	 	 	40	 
	SECTION 9.03 Expenses; Indemnity; Damage Waiver
	 	 	41	 
	SECTION 9.04 Successors and Assigns
	 	 	42	 
	SECTION 9.05 Survival
	 	 	45	 
	SECTION 9.06 Counterparts; Integration; Effectiveness
	 	 	45	 
	SECTION 9.07 Severability
	 	 	46	 
	SECTION 9.08 Right of Setoff
	 	 	46	 
	SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process
	 	 	46	 
	SECTION 9.10 WAIVER OF JURY TRIAL
	 	 	47	 
	SECTION 9.11 Headings
	 	 	47	 
	SECTION 9.12 Confidentiality
	 	 	47	 
	SECTION 9.13 Interest Rate Limitation
	 	 	48	 
	SECTION 9.14 Syndication Agents and Documentation Agents
	 	 	48	 
	SECTION 9.15 USA Patriot Act
	 	 	49	 






Schedule 1.01 — Applicable Margin

Schedule 2.01 — Commitments

Schedule 6.01 — Existing Subsidiary Indebtedness

Schedule 6.02 — Existing Liens

Schedule 6.03 — Certain Permitted Transfers




Exhibit A — Assignment and Assumption

Exhibit B-1 — Term Note

Exhibit B-2 — Bridge Note





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CREDIT AGREEMENT




     CREDIT AGREEMENT (as amended, modified, restated, supplemented and in effect from time to
time, herein called this “Agreement”) dated as of August 20, 2008, among SMITH
INTERNATIONAL, INC., a Delaware corporation, the LENDERS party hereto, WELLS FARGO BANK, N.A., as
Syndication Agent, CALYON NEW YORK BRANCH, DNB NOR BANK ASA and THE ROYAL BANK OF SCOTLAND PLC, as
Co-Documentation Agents, DNB NOR BANK ASA and FORTIS BANK SA/NV, NEW YORK BRANCH, as Co-Lead
Arrangers and Joint Bookrunners and FORTIS BANK SA/NV, NEW YORK BRANCH, as Administrative Agent for
the Lenders.



     The parties hereto agree as follows:



ARTICLE I

Definitions




     SECTION 1.01 Defined Terms. As used in this Agreement, the following terms have the
meanings specified below:



     “ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to
the Alternate Base Rate.



     “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
(a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.



     “Administrative Agent” means Fortis Bank SA/NV, New York Branch, in its capacity as
administrative agent for the Lenders hereunder, and its successors in that capacity.



     “Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.



     “Affiliate” means, with respect to a specified Person, another Person that directly,
or indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.



     “Alternate Base Rate” means, for any day, a rate per annum equal to the greater of (a)
the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% or (b) the Prime Rate in
effect on such day. Any change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.



     “Applicable Percentage” means, with respect to any Lender, the percentage of the total
Commitments represented by such Lender’s Commitment. If the Commitments have terminated



 









 







or expired, the Applicable Percentages shall be determined based upon the Commitments most
recently in effect, giving effect to any assignments.



     “Applicable Margin” means, for any day with respect to any ABR Loan or Eurodollar Loan
r, as the case may be, the applicable margin per annum set forth on Schedule 1.01 hereto
under the caption “ABR Applicable Margin” or “Adjusted LIBO Applicable Margin”, as the case may be,
based upon the ratings by Moody’s and S&P, respectively, applicable on such date to the Index Debt.
For purposes of the foregoing, (i) if both Moody’s and S&P shall not have in effect a rating for
the Index Debt (other than by reason of the circumstances referred to in the last sentence of this
definition), then such rating agencies shall be deemed to have established a rating in Category 6,
and if either (but not both), Moody’s and S&P shall not have in effect a rating for the Index Debt
(other than by reason of the circumstances referred to in the last sentence of this definition),
then the remaining rating shall control; (ii) if the ratings established or deemed to have been
established by Moody’s and S&P for the Index Debt shall fall within different Categories, the
Applicable Margin shall be based on the higher of the two ratings unless one of the two ratings is
two or more Categories lower than the other, in which case the Applicable Margin shall be
determined by reference to the Category next below that of the higher of the two ratings; and (iii)
if the ratings established or deemed to have been established by Moody’s and S&P for the Index Debt
shall be changed (other than as a result of a change in the rating system of Moody’s or S&P), such
change shall be effective as of the date on which it is first announced by the applicable rating
agency, irrespective of when notice of such change shall have been furnished to the Agent and the
Lenders pursuant to Section 5.01 or otherwise. Each change in the Applicable Margin shall
apply during the period commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change. If the rating system of Moody’s
or S&P shall change, or if either such rating agency shall cease to be in the business of rating
corporate debt obligations, Borrower and the Lenders shall negotiate in good faith to amend this
definition to reflect such changed rating system or the unavailability of ratings from such rating
agency and, pending the effectiveness of any such amendment, the Applicable Margin shall be
determined by reference to the rating most recently in effect prior to such change or cessation.



     “Approved Fund” has the meaning assigned to such term in Section 9.04.



     “Asset Sale” means a sale, transfer or other disposition of an entire or partial
interest in a business operation of the Borrower, in one transaction or a series of transactions,
with Net Asset Sales Proceeds in excess of $100,000,000.



     “Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required by Section
9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other
form approved by the Administrative Agent.



     “Board” means the Board of Governors of the Federal Reserve System of the United
States of America and any successor entity performing similar functions.



     “Borrower” means Smith International, Inc., a Delaware corporation.



2









 





     “Borrowing” means Loans of the same Type made, converted or continued on the same date
and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.



     “Borrowing Request” means a request by Borrower for a Borrowing in accordance with
Section 2.03.



     “Bridge Loan Commitment” means, with respect to each Lender, the commitment, if any,
of such Lender to make Bridge Loans, expressed as an amount representing the maximum aggregate
amount of such Lender’s Bridge Loan hereunder, as such commitment may be reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The
initial amount of each Lender’s Bridge Loan Commitment is set forth on Schedule 2.01, or in
the Assignment and Assumption pursuant to which such Lender shall have assumed its Bridge Loan
Commitment, as applicable. The initial aggregate amount of the Lenders’ Bridge Loan Commitments is
$1,000,000,000.



     “Bridge Loan” means a Loan made pursuant to Section 2.01(b).



     “Bridge Loan Maturity Date” means August 19, 2009.



     “Business Day” means any day that is not a Saturday, Sunday or other day on which
national banks in New York City are authorized or required by law to remain closed;
provided that, when used in connection with a Eurodollar Loan, the term “Business
Day” shall also exclude any day on which banks are not open for dealings in Dollar deposits in
the London interbank market.



     “Capital Lease Obligations” means, as to any Person, the obligations of such Person to
pay rent or other amounts under a lease of (or other agreement conveying the right to use) real
and/or personal property which obligations are required to be classified and accounted for as a
capital lease on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board, as amended) and, for
purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof,
determined in accordance with GAAP (including such Statement No. 13). Capital Lease Obligations
shall not include the interest component of any applicable rental payment.



     “Ceiling Rate” means, on any day, the maximum nonusurious rate of interest permitted
for that day by whichever of applicable federal or New York (or any jurisdiction whose usury laws
are deemed to apply to the Notes or any other Loan Documents despite the intention and desire of
the parties to apply the usury laws of the State of New York) laws permits the higher interest
rate, stated as a rate per annum. On each day, if any, that the Texas Finance Code establishes the
Ceiling Rate, the Ceiling Rate shall be the “weekly ceiling” (as defined in the Texas Finance Code)
for that day. Administrative Agent may from time to time, as to current and future balances,
implement any other ceiling under the Texas Finance Code by notice to Borrower, if and to the
extent permitted by the Texas Finance Code. Without notice to Borrower or any other Person, the
Ceiling Rate shall automatically fluctuate upward and downward as and in the amount by which such
maximum nonusurious rate of interest permitted by applicable law fluctuates.



3









 





     “Change in Control” means (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the Securities Exchange
Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the
date hereof), of Equity Interests representing more than 50% of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of Borrower; (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of Borrower by Persons
who were neither (i) nominated by the board of directors of Borrower nor (ii) appointed by
directors so nominated; or (c) the acquisition of direct or indirect Control of Borrower by any
Person or group.



     “Change in Law” means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender (or, for purposes of Section 2.13(b), by any lending office of
such Lender or by such Lender’s holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or issued after the
date of this Agreement.



     “CLO” has the meaning assigned to such term in Section 9.04.



     “Code” means the Internal Revenue Code of 1986, as amended from time to time.



     “Commitment” means a Term Loan Commitment or a Bridge Loan Commitment.



     “Control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto.



     “Debt to Capitalization Ratio” shall mean, as of any day, without duplication, the
ratio of (a) interest bearing Indebtedness (including Indebtedness bearing imputed interest as a
result of having been issued at a discount and including the principal component of Capital Lease
Obligations) to (b) the sum of (i) such interest bearing Indebtedness plus (ii) stockholders’
equity as determined in accordance with GAAP plus (iii) minority interests in majority-owned
Subsidiaries. For purposes of this definition, the term “Indebtedness” shall not include
intercompany debt which is held by Borrower or any of its Subsidiaries.



     “Default” means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.



     “Dollars” or “$” refers to lawful money of the United States of America.



     “Effective Date” means the first date on which the conditions specified in Section
4.01 are satisfied (or waived in accordance with Section 9.02); provided that the
Effective Date shall be no later than August 25, 2008.



4









 





     “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment, preservation or reclamation
of natural resources or the management, release or threatened release of any Hazardous Material.



     “Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of
Borrower or any Material Subsidiary directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
release or threatened release of any Hazardous Materials into the environment or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.



     “Equity Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person, and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such equity interest.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time.



     “ERISA Affiliate” means any trade or business (whether or not incorporated) that,
together with Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or,
solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.



     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived;
(c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by
Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by Borrower or any ERISA Affiliate from the PBGC or a
plan administrator of any notice relating to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by Borrower or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from Borrower or any ERISA Affiliate of any notice, concerning
the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.



5









 





     “Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.



     “Eurodollar Office” means with respect to any Lender the office or offices of such
Lender which shall be making or maintaining the Eurodollar Borrowing of such Lender hereunder. A
Eurodollar Office of any Lender may be, at the option of such Lender, either a domestic or foreign
office.



     “Event of Default” has the meaning assigned to such term in Article VII.



     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any
other recipient of any payment to be made by or on account of any obligation of Borrower hereunder,
(a) income or franchise taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by Borrower under Section 2.17(b)),
any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such
Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is
attributable to such Foreign Lender’s failure to comply with Section 2.15(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation
of a new lending office (or assignment), to receive additional amounts from Borrower with respect
to such withholding tax pursuant to Section 2.15(a).



     “Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received
by the Administrative Agent from three Federal funds brokers of recognized standing selected by the
Administrative Agent.



     “Financial Officer” means the chief financial officer, principal accounting officer,
treasurer or controller of Borrower.



     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction
other than that in which Borrower is located. For purposes of this definition, the United States
of America, each State thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.



     “GAAP” means generally accepted accounting principles in the United States of America.



6









 





     “Governmental Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.



     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or obligation;
provided, that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business.



     “Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Law.



     “Indebtedness” shall mean and include with respect to any Person (a) all items which
in accordance with GAAP would be included on the liability side of a balance sheet of such Person
on the date as of which Indebtedness is to be determined (excluding capital stock, surplus, surplus
reserves and deferred credits); (b) all guaranties, letter of credit contingent reimbursement
obligations, endorsements and other contingent obligations in respect of, or any obligations to
purchase or otherwise acquire, Indebtedness of others, and (c) all Indebtedness secured by any Lien
existing on any interest of such Person in property owned subject to such Lien whether or not the
Indebtedness secured thereby shall have been assumed; provided, that the term “Indebtedness” shall
not mean or include any Indebtedness in respect of which monies sufficient to pay and discharge the
same in full (either on the expressed date of maturity thereof or on such earlier date as such
Indebtedness may be duly called for redemption and payment) shall be deposited, in a manner and
with a depository, agency or trustee reasonably acceptable to the Agent, in trust for the payment
thereof. “Indebtedness” shall not include trade payables and expense accruals incurred in the
ordinary course of the applicable Person’s business provided that such payables have not remained
unpaid for a period of ninety (90) days after the same became due. Expenses which are classified
as “operating lease expenses” under GAAP shall not constitute “Indebtedness” under this Agreement.



     “Indemnified Taxes” means Taxes other than Excluded Taxes.



7









 





     “Index Debt” means senior, unsecured, long-term indebtedness for borrowed money of
Borrower that is not guaranteed by any other Person or subject to any other credit enhancement.



     “Interest Election Request” means a request by Borrower to convert or continue a Loan
in accordance with Section 2.06.



     “Interest Expense” shall mean, for any period, the sum of (a) the cash interest
payments by an obligor made or accrued in accordance with GAAP during such period in connection
with all of its interest-bearing Indebtedness and (b) the interest component of any Capital Lease
Obligations.



     “Interest Payment Date” means (a) with respect to any ABR Loan, the first day of each
January, April, July and October, and (b) with respect to any Eurodollar Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to
the last day of such Interest Period that occurs at intervals of three months’ duration after the
first day of such Interest Period.



     “Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three, six, nine or twelve months (or one week, in the case of an
Interest Period commencing on the Effective Date) thereafter, as Borrower may elect;
provided, that (i) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case such Interest Period
shall end on the next preceding Business Day, and (ii) any Interest Period that commences on the
last Business Day of a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last Business Day of the
last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.



     “Lenders” means the Persons listed on Schedule 2.01 and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption, other than any such
Person that ceases to be a party hereto pursuant to an Assignment and Assumption.



     “LIBO Rate”, with respect to any Eurodollar Borrowing for any Interest Period: (a) a
rate per annum equal to the offered rate for deposits in Dollars for a period equal or comparable
to such Interest Period which appears on Page BBAM of the Bloomberg Financial Markets Information
Service as of noon, New York City time, two Business Days prior to the first day of such Interest
Period, or (b) in the event the rate referenced in the preceding subsection (a) does not appear on
such page or service or such page or service shall cease to be available, the rate per annum equal
to the rate determined by the Administrative Agent as the offered rate on such other page or other
service that displays an average British Bankers Association Interest Settlement Rate for deposits
in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such
Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period, or (c) in the event the rates



8









 







referenced in the preceding subsections (a) and (b) are not available, the rate per annum
determined by the Administrative Agent (in its reasonable discretion) as the rate of interest at
which Dollar deposits (for delivery on the first day of such Interest Period) in same day funds in
the approximate amount of the applicable Eurodollar Borrowing and with a term equivalent to such
Interest Period would be offered by the Administrative Agent’s Eurodollar Office to major banks in
the offshore Dollar market at their request at approximately noon, New York City time, two Business
Days prior to the first day of such Interest Period.



     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same economic effect as any of
the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.



     “Loan” means a Term Loan or a Bridge Loan made pursuant to Section 2.01.



     “Loan Documents” means, collectively, this Agreement, the Notes, all instruments,
certificates and agreements now or hereafter executed or delivered to the Administrative Agent or
any Lender pursuant to any of the foregoing or in connection with the obligations of Borrower under
this Agreement and the other Loan Documents or any commitment regarding such obligations, and all
amendments, modifications, renewals, extensions, increases and rearrangements of, and substitutions
for, any of the foregoing.



     “Loans” means the loans made by the Lenders to Borrower pursuant to this Agreement.



     “Material Adverse Effect” means a material adverse effect on (a) the business, assets,
property or condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a whole,
(b) the validity or enforceability against Borrower of any of the Loan Documents or (c) the rights
of or benefits available to the Administrative Agent or the Lenders under any Loan Document.



     “Material Indebtedness” means Indebtedness (other than the Loans), or obligations in
respect of one or more Swap Agreements, of Borrower or any of its Material Subsidiaries in an
aggregate principal amount exceeding $7,500,000. For purposes of determining Material
Indebtedness, the “principal amount” of the obligations in respect of any Swap Agreement at any
time shall be the maximum aggregate amount (giving effect to any netting agreements) that would be
required to be paid if such Swap Agreement were terminated at such time.



     “Material Subsidiary” means each Subsidiary of Borrower with assets comprising 5% or
more of the aggregate fair market value of all assets of Borrower and its Subsidiaries on a
consolidated basis or with a tangible net worth comprising 5% or more of the tangible net worth of
Borrower and its Subsidiaries on a consolidated basis. W-H shall be deemed to constitute a
Material Subsidiary hereunder for all purposes (as if all of the Equity Interests in and to W-H
shall have been acquired on the Effective Date immediately prior to giving effect to this
Agreement).



     “Minimum Hold Amount” means $20,000,000.



9









 





     “Moody’s” means Moody’s Investors Service, Inc.



     “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.



     “Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount equal to:
(i) cash payments (including any cash received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so received) received by
Borrower or any of its Subsidiaries from such Asset Sale, minus (ii) any bona fide direct fees
(including attorney’s fees, accountants’ fees, investment banking fees, brokerage, consultant and
other customary fees, in each case, incurred in connection with such Asset Sale), commissions,
transfer taxes and other customary costs and expenses, in each case, incurred in connection with
such Asset Sale, including (a) taxes paid or payable by Borrower or any of its Subsidiaries as a
result of any gain recognized in connection with such Asset Sale, (b) payment of the outstanding
principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the
Loans) that is secured by a Lien on the stock or assets in question and that is required to be
repaid under the terms thereof as a result of such Asset Sale, (c) amounts provided as a reserve,
in accordance with GAAP, against any liabilities (fixed or contingent) in respect of any
indemnification obligations undertaken by Borrower or any of its Subsidiaries or purchase price
adjustment associated with such Asset Sale (provided that, to the extent and at any time such
amounts are released from such reserve, such amounts shall constitute Net Asset Sale Proceeds) and
(d) any amount required to be paid to any Person (other than Borrower or any of its Subsidiaries)
with a beneficial ownership interest (including such interest by a holder of a minority interest in
the Subsidiary that has sold such property or assets) in the property or assets to be sold pursuant
to such Asset Sale.



     “Notes” shall have the meaning assigned to such term in Section 2.02(a)
hereof.



     “Obligations” means, as at any date of determination thereof, the aggregate principal
amount of Loans outstanding hereunder.



     “Other Taxes” means any and all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any payment made under any
Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any
Loan Document.



     “Participant” has the meaning set forth in Section 9.04.



     “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.



     “Permitted Encumbrances” means:



     (a) Liens imposed by law for taxes that are not yet due or are being contested in compliance
with the provisions of this Agreement;



10









 





     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing obligations that are not
overdue by more than 30 days or are being contested in compliance with Section 5.04;



     (c) Liens, pledges and deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other social security laws or regulations;



     (d) deposits to secure insurance obligations and the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature, in each case in the ordinary course of business;



     (e) judgment and similar liens in respect of judgments that do not constitute an Event of
Default under this Agreement; and



     (f) easements, zoning restrictions, rights-of-way and similar encumbrances and restrictions on
real property imposed by law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of Borrower or any of its Subsidiaries;



     (g) Liens arising from Swap Agreements;



     provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.



     “Person” means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or other entity.



     “Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA,
and in respect of which Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.



     “Prime Rate” means, on any day, the prime rate of Fortis Bank SA/NV, New York Branch
in effect for that day at the principal offices of Fortis Bank SA/NV, New York Branch in New York,
New York. The Prime Rate is a reference rate and does not necessarily represent the lowest or best
rate or a favored rate, and Administrative Agent and each Lender disclaims any statement,
representation or warranty to the contrary. Administrative Agent or any Lender may make commercial
loans or other loans at rates of interest at, above or below the Prime Rate.



     “Public Debt Offering” means issuance of additional Indebtedness of the Borrower in a
debt capital markets transaction.



     “Register” has the meaning set forth in Section 9.04.



11









 





     “Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.



     “Required Lenders” means, at any time, Lenders having outstanding Loans representing
more than 50% of the sum of the total outstanding Loans at such time.



     “S&P” means Standard & Poor’s Ratings Group.



     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board to which the Administrative Agent is subject, for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any comparable regulation.
The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.



     “Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50% of the equity or
more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, Controlled or held, or (b) that is, as
of such date, otherwise Controlled, by the parent or one or more Subsidiaries of the parent or by
the parent and one or more Subsidiaries of the parent.



     “Swap Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions; provided that no phantom stock or
similar plan providing for payments only on account of services provided by current or former
directors, officers, employees or consultants of Borrower or any of its Subsidiaries shall be a
Swap Agreement.



     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.



     “Term Loan Commitment” means, with respect to each Lender, the commitment, if any, of
such Lender to make Term Loans, expressed as an amount representing the maximum aggregate amount of
such Lender’s Term Loans hereunder, as such commitment may be reduced



12









 







or increased from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04. The initial amount of each Lender’s Term Loan Commitment is set forth on
Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender shall have
assumed its Term Loan Commitment, as applicable. The initial aggregate amount of the Lenders’ Term
Loan Commitments is $1,000,000,000.



     “Term Loan” means a Loan made pursuant to Section 2.01(a).



     “Term Loan Maturity Date” means June 30, 2012.



     “Transactions” means (a) the execution, delivery and performance by Borrower of the
Loan Documents to which it is to be a party, the borrowing of Loans and the use of the proceeds
thereof and (b) the execution, delivery and performance by Borrower of each other document and
instrument required to satisfy the conditions precedent to the initial Loan hereunder.



     “Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the
Adjusted LIBO Rate or the Alternate Base Rate.



     “W-H” means W-H Energy Services, Inc., a Texas corporation.



     “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.



     SECTION 1.02 Classification of Loans and Borrowings. For purposes of this Agreement,
Loans may be classified and referred to by Type (e.g., a “Eurodollar Loan”). Borrowings
also may be classified and referred to by Type (e.g., a “Eurodollar Borrowing”).



     SECTION 1.03 Terms Generally. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The
word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.



13









 





     SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided that, if Borrower notifies the Administrative Agent that
Borrower requests an amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Administrative Agent notifies Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any such notice is given
before or after such change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before such change shall have
become effective until such notice shall have been withdrawn or such provision amended in
accordance herewith.



ARTICLE II

The Credits




     SECTION 2.01 Commitments.



     (a) Subject to the terms and conditions set forth herein, each Lender agrees to make Term
Loans to Borrower on the Effective Date in an aggregate principal amount equal to such Lender’s
Term Loan Commitment. Amounts repaid on the Term Loans may not be reborrowed.



     (b) Subject to the terms and conditions set forth herein, each Lender agrees to make Bridge
Loans to Borrower on the Effective Date in an aggregate principal amount equal to such Lender’s
Bridge Loan Commitment. Amounts repaid on the Bridge Loans may not be reborrowed.



     SECTION 2.02 Loans and Borrowings.



     (a) Each Loan shall be made as part of a Borrowing consisting of Loans of the same Type made
by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender
to make any Loan required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required. The Term Loans made by each
Lender shall be evidenced by a single Note of Borrower in substantially the form of Exhibit
B-1 payable to the order of such Lender in a principal amount equal to the applicable Term Loan
Commitment of such Lender, and otherwise duly completed and the Bridge Loans made by each Lender
shall be evidenced by a single Note of Borrower in substantially the form of Exhibit B-2
payable to the order of such Lender in a principal amount equal to the applicable Bridge Loan
Commitment of such Lender, and otherwise duly completed (such notes, together with all renewals,
extensions, modifications and replacements thereof and substitutions therefor, being herein called
a “Note” and collectively called the “Notes”). Each Lender is hereby authorized by
Borrower to endorse on the schedule (or a continuation thereof) that may be attached to each Note
of such Lender, to the extent applicable, the date, amount, type of and the applicable period of
interest for each Loan made by such Lender to Borrower hereunder, and the amount of each payment or
prepayment of principal of such Loan received by such Lender, provided, that any failure by such
Lender to make any such endorsement shall not affect the obligations of Borrower under such Note or
hereunder in respect of such Loan.



14









 





     (b) Subject to Section 2.12, each Loan shall be comprised entirely of ABR Loans or
Eurodollar Loans as Borrower may request in accordance herewith. Each Lender at its option may
make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to
make such Loan; provided that any exercise of such option shall not affect the obligation
of Borrower to repay such Loan in accordance with the terms of this Agreement or otherwise result
in an increased cost to Borrower.



     (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing
shall be in an aggregate amount that is equal to $1,000,000 or an increment of $100,000 in excess
thereof. At the time that each ABR Loan is made, such Borrowing shall be in an aggregate amount
that is equal to $1,000,000 or an increment of $100,000 in excess thereof. Borrowings of more than
one Type may be outstanding at the same time; provided that there shall not at any time be
more than a total of five (5) Eurodollar Borrowings outstanding.



     (d) Notwithstanding any other provision of this Agreement, (i) Borrower shall not be entitled
to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Term Loan Maturity Date or the Bridge Loan Maturity Date, as
the case may be, and (ii) Borrower shall not be entitled to request, or to elect to convert or
continue, any Borrowing which is a Term Loan if after giving effect thereto the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings which are Term Loans with Interest
Periods ending on or prior to any applicable scheduled repayment date plus the aggregate principal
amount of outstanding ABR Borrowings which are Term Loans would be less than the aggregate
principal amount of Term Loans required to be repaid on such scheduled repayment date.



     SECTION 2.03 Requests for Borrowings. To request a Loan, Borrower shall notify the
Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., New York City time, two Business Days before the date of the proposed
Borrowing and (b) in the case of an ABR Borrowing, not later than noon, New York City time, on the
date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and
shall be confirmed by hand delivery or telecopy to the Administrative Agent on the same day as the
telephonic request of a written Borrowing Request in a form approved by the Administrative Agent
and signed by Borrower. Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.02:




     (i) the aggregate amount of such Borrowing;




     (ii) the date of such Borrowing, which shall be a Business Day;




     (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;




     (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of the term
“Interest Period” (provided that the initial Interest Period shall be for one month); and



15









 






     (v) the location and number of Borrower’s account to which funds are to be disbursed,
which shall comply with the requirements of Section 2.05.



     If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an
ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Loan,
then Borrower shall be deemed to have selected an Interest Period of one month’s duration.
Promptly following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the amount of such
Lender’s Loan to be made as part of the requested Borrowing. Notwithstanding the foregoing,
Borrower acknowledges that Borrower shall bear all risk of loss resulting from disbursements made
upon telephonic request.



     SECTION 2.04 [Intentionally Left Blank].



     SECTION 2.05 Funding of Borrowings.



     (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof
by wire transfer of immediately available funds by 2:00 p.m., New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by notice to the Lenders.
The Administrative Agent will make such Loans available to Borrower by promptly crediting the
amounts so received, in like funds, to an account of Borrower maintained with the Administrative
Agent and designated by Borrower in the applicable Borrowing Request.



     (b) Unless the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this Section and
may, in reliance upon such assumption, make available to Borrower a corresponding amount. If a
Lender has not in fact made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to Borrower to but excluding the date of payment
to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such
amount shall constitute such Lender’s Loan included in such Borrowing.



     SECTION 2.06 Interest Elections.



     (a) Each Loan initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request. Thereafter, Borrower may elect to convert such Borrowing to a different
Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section. Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case



16









 







each such portion shall be allocated ratably among the Lenders holding the Loans comprising
such Borrowing, and the Loans comprising each such portion shall be considered a separate
Borrowing.



     (b) To make an election pursuant to this Section, Borrower shall notify the Administrative
Agent of such election by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00
a.m., New York City time, two Business Days before the proposed Borrowing and (b) in the case of an
ABR Borrowing, not later than noon, New York City time, on the date of the proposed Borrowing.
Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed by hand
delivery or telecopy to the Administrative Agent on the same day as such telephonic request of a
written Interest Election Request in a form approved by the Administrative Agent and signed by
Borrower.



     (c) Each telephonic and written Interest Election Request shall specify the following
information:




     (i) the Borrowing to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the portions thereof
to be allocated to each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);




     (ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;




     (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and




     (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.



     If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an
Interest Period, then Borrower shall be deemed to have selected an Interest Period of one month’s
duration.



     (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall
advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.



     (e) If Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the request of the Required
Lenders, so notifies Borrower, then, so long as an Event of Default is continuing (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii)



17









 







unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of
the Interest Period applicable thereto.



     SECTION 2.07 Termination of Commitments. The Commitments shall terminate at 3:00
p.m., New York City time, on the Effective Date.



     SECTION 2.08 Repayment of Loans; Evidence of Debt.



     (a) Borrower shall repay the Term Loans as follows:



	 	 	 	 	 
	Date	 	Amount
	December 31, 2008

	 	$	125,000,000	 
	June 30, 2009

	 	$	125,000,000	 
	December 31, 2009

	 	$	125,000,000	 
	June 30, 2010

	 	$	125,000,000	 
	December 31, 2010

	 	$	125,000,000	 
	June 30, 2011

	 	$	125,000,000	 
	December 31, 2011

	 	$	125,000,000	 
	June 30, 2012

	 	$	125,000,000	 





To the extent not previously paid, all Term Loans shall be due and payable on the Term Loan
Maturity Date.




     (b) Borrower shall repay the entire unpaid principal amount of each Bridge Loan of such Lender
on the Bridge Loan Maturity Date.



     (c) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of Borrower to such Lender resulting from each Loan made by such
Lender, including the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.



     (d) The Administrative Agent shall maintain accounts in which it shall record (i) the amount
of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable from Borrower to
each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof.



     (e) The entries made in the accounts maintained pursuant to paragraph (b) or
(c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any Lender or the
Administrative Agent to maintain such accounts or any error therein shall not in any manner affect
the obligation of Borrower to repay the Loans in accordance with the terms of this Agreement.



18









 





     SECTION 2.09 Prepayment of Loans.



     (a) Borrower shall have the right at any time and from time to time to prepay any Borrowing in
whole or in part, subject to the requirements of this Section. All prepayments under this
Section 2.09(a) shall be applied first to payment of the scheduled installment payments in
respect of the Term Loans in their order of maturity, with the balance to be applied to the unpaid
principal balance of the Bridge Loans.



     (b) Subject to Section 2.09(g) below, following the date of receipt by Borrower or any
of its Subsidiaries of any Net Asset Sale Proceeds after the Effective Date, Borrower shall prepay
the Term Loans in an aggregate amount equal to fifty percent (50%) of the amount of such Net Asset
Sale Proceeds, rounded to the nearest $100,000, such prepayment to be made no later than the 30th
day following the date of receipt by Borrower or any of its Subsidiaries of such Net Asset Sale
Proceeds. All prepayments under this Section 2.09(b) shall be applied to payment of the
scheduled installment payments in respect of the Term Loans in their order of maturity.



     (c) Subject to Section 2.09(g) below, no later than five Business Days following date
of receipt by Borrower of any cash proceeds (net of reasonable attorneys’ fees, investment banking
fees, accountants’ fees, underwriting discounts and commissions and other reasonable customary fees
and expenses actually incurred in connection with the incurrence of the applicable Indebtedness)
from a Public Debt Offering, Borrower shall prepay the Bridge Loans in an aggregate amount equal to
100% of such net cash proceeds.



     (d) Concurrently with any prepayment of the Loans pursuant to Sections 2.09(b) through
2.09(c), Borrower shall deliver to the Administrative Agent a certificate of an authorized
officer demonstrating the calculation of the amount of the applicable net proceeds. In the event
that Borrower shall subsequently determine that the actual net cash amount required to be prepaid
pursuant to this Section exceeded the amount set forth in such certificate, the Borrower shall
promptly make an additional prepayment of the Loans, and the Borrower shall concurrently therewith
deliver to the Administrative Agent a certificate of an authorized officer demonstrating the
derivation of such excess. Each mandatory prepayment shall be made without premium or penalty
other than the payment of all accrued and unpaid interest on the Loans prepaid and any applicable
breakage fees and funding losses pursuant to this Agreement.



     (e) Any amount required to be paid pursuant to Sections 2.09(b) through
2.09(c) shall be applied first to prepay the ABR Loans to the full extent thereof before
application to the Eurodollar Loans, in each case in a manner that minimizes the amount of any
applicable breakage fees and funding losses pursuant to this Agreement.



     (f) Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar Loan, not later than 1:00 p.m.,
New York City time, three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Loan, not later than 1:00 p.m., New York City time, one Business Day before
the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment
date, the principal amount of each Borrowing or portion thereof to be prepaid. Promptly following
receipt of any such notice, the Administrative Agent shall advise



19









 







the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount equal to $1,000,000 or an increment of $100,000 in excess thereof.



     (g) Notwithstanding the provisions of this Section, no mandatory prepayment of the Loans shall
be required to the extent that such prepayment would result in the occurrence of a “Default” or
“Event of Default” under that certain Credit Agreement dated as of May 5, 2005 executed by and
among Borrower and M-I L.L.C., a Delaware limited liability company (collectively as the
borrowers), COMERICA BANK, as Administrative Agent, and certain financial institutions therein
named, as amended by instrument dated as of August 22, 2006 (but without consideration of any
additional amendment or modification unless the same shall have been approved in writing by the
Required Lenders).



     SECTION 2.10 Fees.



     (a) Borrower agrees to pay to the Administrative Agent for the account of each Lender an
upfront fee in an amount equal to 0.075% times the amount of each respective Lender’s Term
Loan Commitment, such upfront fee to be due and payable on the Effective Date.



     (b) Unless all of the Bridge Loans shall have been paid in full on or before January 1, 2009,
Borrower agrees to pay to the Administrative Agent for the account of each Lender a fee in an
amount equal to 0.35% times the amount of the outstanding principal balance, as of 3:00 p.m., New
York City time, of the Bridge Loans owed to each respective Lender, such fee to be due and payable
on January 2, 2009.



     (c) All fees payable hereunder shall be paid on the dates due, in immediately available funds,
to the Administrative Agent for distribution to the Lenders entitled thereto. Fees paid shall not
be refundable under any circumstances, absent manifest error in the calculation or assessment of
such fees.



     SECTION 2.11 Interest.



     (a) The Loans comprising each ABR Borrowing shall bear interest at the lesser of (i) the
Alternate Base Rate plus the Applicable Margin or (ii) the Ceiling Rate.



     (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the lesser of (i)
the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable
Margin or (ii) the Ceiling Rate.



     (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or
other amount payable by Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to the lesser of (i) the Ceiling Rate or (ii) in the case of
overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in
the preceding paragraphs of this Section or in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.



20











 





     (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date
for such Loan; provided that (i) interest accrued pursuant to paragraph (c) of this
Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan,
accrued interest on the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to
the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on
the effective date of such conversion.



     (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the Alternate Base Rate shall be computed on the basis of a year
of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number
of days elapsed (including the first day but excluding the last day). The applicable Alternate
Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.



     SECTION 2.12 Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:



     (a) the Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate for such Interest Period; or



     (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate
for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or
Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;



then the Administrative Agent shall give notice thereof to Borrower and the Lenders by telephone or
telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies
Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any
Interest Election Request that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request
requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing; provided
that if the circumstances giving rise to such notice affect only one Type of Borrowings, then the
other Type of Borrowings shall be permitted.



     SECTION 2.13 Increased Costs.



     (a) If any Change in Law shall:




     (i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit extended by,
any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or




     (ii) impose on any Lender or the London interbank market any other condition affecting
this Agreement or Eurodollar Loans made by such Lender;



21









 




and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to
reduce the amount of any sum received or receivable by such Lender (whether of principal, interest
or otherwise), then Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.




     (b) If any Lender determines that any Change in Law regarding capital requirements has or
would have the effect of reducing the rate of return on such Lender’s capital or on the capital of
such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such
Lender to a level below that which such Lender or such Lender’s holding company could have achieved
but for such Change in Law (taking into consideration such Lender’s policies and the policies of
such Lender’s holding company with respect to capital adequacy), then from time to time Borrower
will pay to such Lender such additional amount or amounts as will compensate such Lender or such
Lender’s holding company for any such reduction suffered.



     (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such
Lender or its holding company, as the case may be, as specified in paragraph (a) or
(b) of this Section shall be delivered to Borrower and shall be conclusive absent manifest
error. Borrower shall pay such Lender the amount shown as due on any such certificate within
10 days after receipt thereof.



     (d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section
shall not constitute a waiver of such Lender’s right to demand such compensation; provided
that no Borrower shall be required to compensate a Lender pursuant to this Section for any
increased costs or reductions incurred more than 180 days prior to the date that such Lender
notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of
such Lender’s intention to claim compensation therefor; provided further that, if
the Change in Law giving rise to such increased costs or reductions is retroactive, then the
180-day period referred to above shall be extended to include the period of retroactive effect
thereof.



     SECTION 2.14 Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto regardless of whether such notice may be revoked and is revoked in accordance with
the terms of this Agreement, or (d) the assignment of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto as a result of a request by Borrower pursuant to
Section 2.17, then, in any such event, Borrower shall compensate each Lender for the loss,
cost and expense attributable to such event. Such loss, cost or expense to any Lender shall be
deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount
of interest which would have accrued on the principal amount of such Loan had such event not
occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period therefor (or, in
the case of a failure to borrow, convert or continue, for the period that would have been the



22









 




Interest Period for such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would bid were it to bid,
at the commencement of such period, for Dollar deposits of a comparable amount and period from
other banks in the eurodollar market. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to
Borrower and shall be conclusive absent manifest error. Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.




     SECTION 2.15 Taxes.



     (a) Any and all payments by or on account of any obligation of Borrower hereunder or under any
other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes
or Other Taxes; provided that if Borrower shall be required to deduct any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent or Lender (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make
such deductions and (iii) Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.



     (b) In addition, Borrower shall pay any applicable Other Taxes to the relevant Governmental
Authority in accordance with applicable law.



     (c) Borrower shall indemnify the Administrative Agent and each Lender, within 10 days after
written demand therefor, for the full amount of any applicable Indemnified Taxes or applicable
Other Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect
to any payment by or on account of any obligation of Borrower hereunder or under any other Loan
Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as
to the amount of such payment or liability delivered to Borrower by a Lender, or by the
Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent
manifest error.



     (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by Borrower
to a Governmental Authority, Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment reasonably satisfactory to
the Administrative Agent.



     (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall deliver to Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable



23









 




law or reasonably requested by Borrower as will permit such payments to be made without
withholding or at a reduced rate.




     (f) If the Administrative Agent or a Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes or “gross-up” payment as to which it has been
indemnified by Borrower or with respect to which Borrower has paid additional amounts pursuant to
this Section 2.15, it shall pay over such refund to Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by Borrower under this Section 2.15
with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund); provided, that Borrower,
upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over
to Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such
Lender is required to repay such refund to such Governmental Authority. This Section shall not be
construed to require the Administrative Agent or any Lender to make available its tax returns (or
any other information relating to its taxes which it deems confidential) to Borrower or any other
Person.



     SECTION 2.16 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.



     (a) Borrower shall make each payment required to be made by it hereunder or under any other
Loan Document (whether of principal, interest or fees, or of amounts payable under Section
2.13, 2.14 or 2.15, or otherwise) prior to the time expressly required
hereunder or under such other Loan Document for such payment (or, if no such time is expressly
required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available
funds, without set-off, deduction or counterclaim. Any amounts payable to the Administrative Agent
that are received after such time on any date may, in the discretion of the Administrative Agent,
be deemed to have been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at its offices at
101 Hudson Street, 21st Floor, Jersey City, NJ 07302, except that payments pursuant to
Sections 2.13, 2.14, 2.15 and 9.03 shall be made directly to the
Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons
specified therein. The Administrative Agent shall distribute any such payments received by it for
the account of any other Person to the appropriate recipient promptly following receipt thereof.
If any payment under any Loan Document shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such extension. All
payments under each Loan Document shall be made in Dollars.



     (b) If at any time insufficient funds are received by and available to the Administrative
Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall
be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of principal then due to such parties.



24









 





     (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans, resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued
interest thereon than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the Loans of other
Lenders to the extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided that (i) if any such participations are purchased and all
or any portion of the payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any payment made by
Borrower pursuant to and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a participation in any of
its Loans to any assignee or participant, other than to Borrower or any of its Subsidiaries or any
of its Affiliates (as to which the provisions of this paragraph shall apply). Each Lender agrees
that it will not exercise any right of set-off or counterclaim or otherwise obtain payment in
respect of any Obligation owed to it other than principal of and interest accruing on the Loans,
unless all of the outstanding principal of and accrued interest on the Loans have been paid in
full. Borrower consents to the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements
may exercise against Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of Borrower in the amount of such participation.



     (d) Unless the Administrative Agent shall have received notice from Borrower prior to the date
on which any payment is due to the Administrative Agent for the account of the Lenders hereunder
that Borrower will not make such payment, the Administrative Agent may assume that Borrower has
made such payment on such date in accordance herewith and may, without obligation, in reliance upon
such assumption, distribute to the Lenders the amount due. If Borrower has not in fact made such
payment when due, then each of the Lenders severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender with interest thereon, for each day
from and including the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation.



     (e) If any Lender shall fail to make any payment required to be made by it pursuant to this
Agreement, then the Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender’s obligations hereunder until all such unsatisfied
obligations are fully paid.



     SECTION 2.17 Mitigation Obligations; Replacement of Lenders.



     (a) If any Lender requests compensation under Section 2.13, or if Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the



25









 




account of any Lender pursuant to Section 2.15, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans hereunder or to
assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if,
in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the future
and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.




     (b) If any Lender requests compensation under Section 2.13, or if Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 2.15, or if any Lender defaults in its obligation to fund Loans
hereunder, then Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in Section 9.04), all its interests, rights
and obligations under this Agreement to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided that (i)
Borrower shall have received the prior written consent of the Administrative Agent, which consent
shall not unreasonably be withheld, (ii) such assignor Lender shall have received payment of an
amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or Borrower (in the case of all other amounts) and
(iii) in the case of any such assignment resulting from a claim for compensation under
Section 2.13 or payments required to be made pursuant to Section 2.15, such
assignment will result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling Borrower to require such assignment and
delegation cease to apply.



     SECTION 2.18 Defaulting Lender.



     (a) Notwithstanding anything to the contrary contained herein, in the event any Lender (x) has
refused (which refusal constitutes a breach by such Lender of its obligations under this Agreement)
to make available its portion of any Loan or (y) notifies either the Administrative Agent or
Borrower that such Lender does not intend to make available its portion of any Loan (if the actual
refusal would constitute a breach by such Lender of its obligations under this Agreement) (each, a
“Lender Default”), all rights and obligations hereunder of such Lender (a “Defaulting Lender”) as
to which a Lender Default is in effect and of the other parties hereto shall be modified to the
extent of the express provisions of this Section while such Lender Default remains in effect.



     (b) Loans shall be made pro rata by Lenders (the “Non-Defaulting Lenders”) which are not
Defaulting Lenders based on their respective Commitments) and no Commitment of any Lender or any
pro rata share of any Loans required to be advanced by any Lender shall be increased as a result of
such Lender Default. Amounts received in respect of principal of any type of Loans shall be
applied to reduce the applicable Loans of each Lender pro rata based on the aggregate of the
outstanding Loans of that type of all Lenders at the time of such application;



26









 




provided, that, such amount shall not be applied to any Loans of a Defaulting Lender at any
time when, and to the extent that, the aggregate amount of Loans of any Non-Defaulting Lender
exceeds such Non-Defaulting Lender’s Commitment of all Loans then outstanding.




     (c) A Defaulting Lender shall not be entitled to give instructions to the Administrative Agent
or to approve, disapprove, consent to or vote on any matters relating to this Agreement and the
other Loan Documents. All amendments, waivers and other modifications of this Agreement and the
other Loan Documents may be made without regard to a Defaulting Lender and, for purposes of the
definition of “Required Lenders,” a Defaulting Lender shall be deemed not to be a Lender and not to
have Loans outstanding.



     (d) Other than as expressly set forth in this Section, the rights and obligations of a
Defaulting Lender (including the obligation to indemnify the Administrative Agent) and the other
parties hereto shall remain unchanged. Nothing in this Section shall be deemed to release any
Defaulting Lender from its obligations under this Agreement and the other Loan Documents, shall
alter such obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which Borrower, the Administrative Agent or any Lender may
have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder.



     (e) In the event a Defaulting Lender retroactively cures to the satisfaction of the
Administrative Agent the breach which caused a Lender to become a Defaulting Lender, such
Defaulting Lender shall no longer be a Defaulting Lender and shall be treated as a Lender under
this Agreement and the other Loan Documents.



ARTICLE III

Representations and Warranties




     Borrower represents and warrants to the Lenders that:



     SECTION 3.01 Organization; Powers. Each of Borrower and its Material Subsidiaries is
duly organized, validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as now conducted and,
except where the failure to do so would not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such
qualification is required.



     SECTION 3.02 Authorization; Enforceability. The Transactions to be entered into by
Borrower are within Borrower’s powers and have been duly authorized by all necessary action. This
Agreement has been duly executed and delivered by Borrower and constitutes, and each other Loan
Document to which Borrower is to be a party, when executed and delivered by Borrower, will
constitute, a legal, valid and binding obligation of Borrower, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.



     SECTION 3.03 Governmental Approvals; No Conflicts. The Transactions (a) do not
require any material consent or approval of, registration or filing with, or any other action by,



27









 




any Governmental Authority, except such as have been obtained or made and are in full force
and effect, (b) will not violate any applicable law or regulation or the charter, by-laws or other
organizational documents of Borrower or any of its Material Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any material indenture,
agreement or other instrument binding upon Borrower or any of its Material Subsidiaries or their
assets, or give rise to a right thereunder to require any payment to be made by Borrower or any of
its Material Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any
asset of Borrower or any of its Material Subsidiaries.




     SECTION 3.04 Financial Condition. Borrower has heretofore furnished to the
Administrative Agent its consolidated balance sheet and statements of operations, stockholders’
equity and cash flows as of and for the fiscal years ended December 31, 2006 and December 31, 2007,
reported on by Deloitte & Touche LLP, independent registered public accounting firm. Such
financial statements present fairly, in all material respects, the financial position and results
of operations and cash flows of Borrower and its consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP. Since December 31, 2007 through the date of Borrower’s
execution of this Agreement, there has been no material adverse change in the business, assets,
operations, prospects or condition, financial or otherwise, of Borrower and its Subsidiaries, taken
as a whole, other than as a result of industry conditions generally (subject to the W-H exchange
offer closing substantially concurrent herewith).



     SECTION 3.05 Properties.



     (a) Each of Borrower and its Material Subsidiaries has good title to, or valid leasehold
interests in, all its real and personal property material to its business, except for minor defects
in title that do not interfere with its ability to conduct its business as currently conducted or
to utilize such properties for their intended purposes.



     (b) Each of Borrower and its Material Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property material to its
business, and the use thereof by Borrower and its Material Subsidiaries does not infringe upon the
rights of any other Person, except for any such infringements that could not reasonably be expected
to result in a Material Adverse Effect.



     SECTION 3.06 Litigation and Environmental Matters.



     (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Borrower, threatened against or affecting
Borrower or any of its Material Subsidiaries (i) as to which, in the reasonable judgment of
Borrower, there is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected to result in a Material Adverse Effect or (ii) that
involve any of the Loan Documents or the Transactions.



     (b) Except with respect to any other matters that, in the reasonable judgment of Borrower,
could not reasonably be expected to result in a Material Adverse Effect, neither Borrower nor any
of its Material Subsidiaries (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under



28









 




any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has
received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis
for any Environmental Liability.




     SECTION 3.07 Compliance with Laws and Agreements. Each of Borrower and its Material
Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property and all indentures, agreements and other instruments binding upon
it or its property, except where the failure to do so could not reasonably be expected to result in
a Material Adverse Effect. No Default has occurred and is continuing.



     SECTION 3.08 Investment Company Status. Neither Borrower nor any of its Material
Subsidiaries is an “investment company” as defined in, or subject to regulation under, the
Investment Company Act of 1940.



     SECTION 3.09 Taxes. Each of Borrower and its Material Subsidiaries has timely filed
or caused to be filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which Borrower or the applicable
Material Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the
extent that the failure to do so could not reasonably be expected to result in a Material Adverse
Effect.



     SECTION 3.10 ERISA. No ERISA Event has occurred or is reasonably expected to occur
that, when taken together with all other ERISA Events for which liability is reasonably expected to
occur, could reasonably be expected to result in a Material Adverse Effect. The present value of
all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed the fair market value of the assets of such
Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based
on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did
not, as of the date of the most recent financial statements reflecting such amounts, exceed the
fair market value of the assets of all such underfunded Plans, in each of such cases so as to cause
a Material Adverse Effect.



     SECTION 3.11 Disclosure. Borrower has disclosed to the Lenders all agreements,
instruments and corporate or other restrictions to which Borrower or any of its Material
Subsidiaries is subject, and all other matters known to Borrower, that could reasonably be expected
to result in a Material Adverse Effect. None of the reports, financial statements, certificates or
other information furnished by or on behalf of Borrower to the Administrative Agent or any Lender
in connection with the negotiation of this Agreement or any other Loan Document or delivered
hereunder or thereunder (as modified or supplemented by other information so furnished) contains
any material misstatement of fact or omits to state any material fact necessary to make the
statements therein, taken as a whole, in the light of the circumstances under which they were made,
not misleading.



29









 





ARTICLE IV

Conditions




     SECTION 4.01 Effective Date. The obligations of the Lenders to make Loans hereunder
shall not become effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):



     (a) The Administrative Agent (or its counsel) shall have received from each party hereto
either (i) counterparts of this Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed counterparts of this Agreement.



     (b) The Administrative Agent (or its counsel) shall have received from Borrower an original of
each applicable Note signed on behalf of Borrower.



     (c) The Administrative Agent (or its counsel) shall have received from Borrower and from each
other party to the Loan Documents (other than the Notes) either (i) counterparts of each applicable
Loan Document signed on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed signature page of the
applicable Loan Document) that such party has signed counterparts of such Loan Document.



     (d) The Administrative Agent shall have received written opinions (addressed to the
Administrative Agent and the Lenders and dated the Effective Date) of (i) Richard E. Chandler, Jr.,
General Counsel of Borrower, and (ii) Gardere Wynne Sewell LLP, counsel for Borrower, in form and
substance satisfactory to the Administrative Agent and its counsel, covering such other matters
relating to Borrower, the Loan Documents or the Transactions as the Required Lenders shall
reasonably request.



     (e) The Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the organization, existence
and good standing of Borrower, the authorization of the Transactions and any other legal matters
relating to Borrower, the Loan Documents or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.



     (f) The Administrative Agent shall have received a certificate, dated the Effective Date and
signed by the President, a Vice President or a Financial Officer of Borrower, confirming that (i)
the representations and warranties of Borrower set forth in the Loan Documents are be true and
correct in all material respects on and as of the Effective Date and (ii) as of the Effective Date,
and immediately after giving effect to the Borrowings on the Effective Date, no Default shall have
occurred and be continuing and there shall have occurred no event which would be reasonably likely
to have a Material Adverse Effect.



     (g) Borrower shall have delivered to the Administrative Agent evidence reasonably satisfactory
to the Administrative Agent that Borrower shall have acquired (or will, substantially concurrent
with the initial Loans hereunder, acquire) all of the Equity Interests in and to W-H.



30









 





     (h) The Administrative Agent shall have received all fees and other amounts due and payable on
or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses (including fees, charges and disbursements of counsel) required to be
reimbursed or paid by Borrower hereunder or under any other Loan Document.



     The Administrative Agent shall notify Borrower and the Lenders of the Effective Date, and such
notice shall be conclusive and binding.



ARTICLE V

Affirmative Covenants




     Until the Commitments have expired or been terminated and the principal of and interest on
each Loan and all fees payable hereunder shall have been paid in full, Borrower covenants and
agrees with the Lenders that:



     SECTION 5.01 Financial Statements; Ratings Change and Other Information. Borrower
will furnish to the Administrative Agent and each Lender:



     (a) within 105 days after the end of each fiscal year, Borrower’s audited consolidated balance
sheet and related statements of operations, stockholders’ equity and cash flows as of the end of
and for such year, setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on by Deloitte & Touche LLP or other independent registered public
accounting firm of recognized national standing (without a “going concern” or like qualification or
exception and without any qualification or exception as to the scope of such audit) to the effect
that such consolidated financial statements present fairly in all material respects the financial
condition and results of operations of Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;



     (b) concurrently with any delivery of financial statements under clause (a) above, a
certificate of the independent registered public accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their examination of such
financial statements of any Default (which certificate may be limited to the extent required by
accounting rules or guidelines);



     (c) within 60 days after the end of each fiscal quarter of each fiscal year, Borrower’s
unaudited (i) consolidated balance sheets as of the end of such fiscal quarter and the preceding
fiscal year-end period, (ii) related statements of operations for such fiscal quarter and the then
elapsed portion of the fiscal year, and (iii) related statements of cash flows for the then elapsed
portion of the fiscal year, in the case of (ii) and (iii), setting forth in comparative form the
figures for the corresponding period of the previous fiscal year. The quarterly financial
statements should be certified by a Financial Officer of Borrower as presenting fairly in all
material respects the financial condition and results of operations of Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes;



31









 





     (d) concurrently with any delivery of financial statements under clause (a) or
(c) above, a certificate of a Financial Officer of Borrower (i) certifying as to whether,
to the knowledge of such officer, a Default has occurred and, if such officer has knowledge of the
occurrence of a Default, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 5.09 and (iii) to the extent that any change in GAAP or in the
application thereof has occurred since the date of the audited financial statements referred to in
Section 3.04 which affects the financial statements accompanying such certificate,
specifying the effect of such change on such financial statements;



     (e) promptly after the same become publicly available, copies of each Form 10-Q and Form 10-K
filed by Borrower with the Securities and Exchange Commission or with any Governmental Authority
succeeding to any or all of the functions of said Commission;



     (f) promptly after Moody’s or S&P shall have announced a change in the rating established or
deemed to have been established for the Index Debt, written notice of such rating change; and



     (g) promptly following any request therefore, such other information regarding the operations,
business affairs and financial condition of Borrower or any of its Subsidiaries, or compliance with
the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request.



     SECTION 5.02 Notices of Material Events. Borrower will, promptly after becoming
aware of the same, furnish to the Administrative Agent and each Lender written notice of the
following:



     (a) the occurrence of any Default;



     (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator
or Governmental Authority against or affecting Borrower or any of its Affiliates that, if adversely
determined, could reasonably be expected to result in a Material Adverse Effect;



     (c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that
have occurred, results in, or could reasonably be expected to result in, a Material Adverse Effect;
and



     (d) any other development that results in, or could reasonably be expected to result in, a
Material Adverse Effect.



     Each notice delivered under this Section shall be accompanied by a statement setting forth the
details of the event or development requiring such notice and any action taken or proposed to be
taken with respect thereto.



     SECTION 5.03 Existence; Conduct of Business. Borrower will, and will cause each of
its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and the rights, licenses, permits, privileges and
franchises



32









 




material to the conduct of its business; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.03.




     SECTION 5.04 Payment of Obligations. Borrower will, and will cause each of its
Subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, could result in
a Material Adverse Effect before the same shall become delinquent or in default, except where (a)
the validity or amount thereof is being contested in good faith by appropriate proceedings, (b)
Borrower or its applicable Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.



     SECTION 5.05 Maintenance of Properties; Insurance. Borrower will, and will cause
each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted, and (b) maintain,
with financially sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations.



     SECTION 5.06 Books and Records; Inspection Rights. Borrower will, and will cause
each of its Subsidiaries to, keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its business and
activities. Borrower will, and will cause each of its Material Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice
to Borrower, to visit and inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.



     SECTION 5.07 Compliance with Laws. Borrower will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority
applicable to it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse Effect.



     SECTION 5.08 Use of Proceeds. The proceeds of the Loans will be used only (i) to
fund the cash consideration payable to W-H shareholders in connection with the exchange offer
closing substantially concurrent herewith, (ii) to repay amounts outstanding under existing credit
facilities of W-H, (iii) to pay fees and expenses incurred in connection with the W-H exchange
offer and (iv) for other general corporate purposes. No part of the proceeds of any Loan will be
used, whether directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations T, U and X, or to fund any activity or business
with any Person or in or with any country or territory which in any manner would result in a
violation by any Person of any sanction or prohibition imposed by a Governmental Authority.



     SECTION 5.09 Financial Covenants. Borrower will have and maintain, on a consolidated
basis, a Debt to Capitalization Ratio of not greater than 40%.



33









 





ARTICLE VI

Negative Covenants




     Until the Commitments have expired or terminated and the principal of and interest on each
Loan and all fees payable hereunder have been paid in full, Borrower covenants and agrees with the
Lenders that:



     SECTION 6.01 Subsidiary Indebtedness. Borrower will not permit any of its
Subsidiaries to create, incur, assume or permit to exist any Indebtedness, except:



     (a) Indebtedness existing on the date hereof and set forth in Schedule 6.01, all
Indebtedness issuable under the instruments and documents set forth in Schedule 6.01 and
extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof;



     (b) Indebtedness of any such Subsidiary to any other such Subsidiary;



     (c) Indebtedness of any such Subsidiary as an account party in respect of trade letters of
credit;



     (d) Indebtedness arising under Swap Agreements which have been entered into for bona fide
hedging purposes and not for speculative purposes;



     (e) other Indebtedness in an aggregate amount not exceeding, at any one time outstanding,
$275,000,000; and



     (f) other Indebtedness, the proceeds of which are applied as a voluntary prepayment of the
Obligations.



     SECTION 6.02 Liens. Borrower will not, and will not permit any of its Subsidiaries
to, create, incur, assume or permit to exist any Lien on any property or asset now owned or
hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable)
or rights in respect of any thereof, except:



     (a) Permitted Encumbrances;



     (b) any Lien on any property or asset of Borrower or any of its Subsidiaries existing on the
date hereof and set forth in Schedule 6.02; provided that (i) such Lien shall not apply to
any other property or asset of Borrower or any of its Subsidiaries (other than proceeds of such
property or asset) and (ii) such Lien shall secure only those obligations which it secures on the
date hereof and extensions, renewals and replacements thereof that do not increase the outstanding
principal amount thereof;



     (c) any Lien existing on any property or asset prior to the acquisition thereof by Borrower or
any of its Subsidiaries or existing on any property or asset of any Person that becomes a
Subsidiary of Borrower after the date hereof prior to the time such Person becomes a Subsidiary of
Borrower; provided that (i) such Lien is not created in contemplation of or in



34









 




connection with such acquisition or such Person becoming a Subsidiary of Borrower, as the case
may be, (ii) such Lien shall not apply to any other property or assets of Borrower or any
Subsidiary of Borrower (other than proceeds of such property or asset) and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition or the date such
Person becomes a Subsidiary of Borrower, as the case may be and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount thereof; and




     (d) Liens on fixed or capital assets acquired, constructed or improved by Borrower or any of
its Subsidiaries; provided that (i) such security interests secure Indebtedness permitted by
clause (e) of Section 6.01, (ii) such security interests and the Indebtedness
secured thereby are incurred prior to or within 90 days after such acquisition or the completion of
such construction or improvement, (iii) the Indebtedness secured thereby does not exceed 100% of
the cost of acquiring, constructing or improving such fixed or capital assets and (iv) such
security interests shall not apply to any other property or assets of Borrower or any of its
Subsidiaries (other than proceeds of such property or asset); provided, however, that the aggregate
amount of the Indebtedness secured by Liens permitted under this Section 6.02(d) shall not
exceed $150,000,000..



     SECTION 6.03 Fundamental Changes.



     (a) Except as set forth in Schedule 6.03, Borrower will not, and will not permit any
of its Subsidiaries to, merge into or consolidate with any other Person, or permit any other Person
to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its assets, or all or
substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or
hereafter acquired), or liquidate or dissolve, except that, so long as at the time thereof and
immediately after giving effect thereto no Default shall have occurred and be continuing, (i) any
Subsidiary of Borrower may merge into Borrower in a transaction in which Borrower is the surviving
corporation, (ii) any Subsidiary of Borrower may merge into any other Subsidiary of Borrower in a
transaction in which the surviving entity is a Subsidiary of Borrower, (iii) any Subsidiary of
Borrower may sell, transfer, lease or otherwise dispose of its assets to Borrower or to another
Subsidiary of Borrower, and (iv) any Subsidiary of Borrower may liquidate or dissolve if Borrower
determines in good faith that such liquidation or dissolution is in the best interests of Borrower
and is not materially disadvantageous to the Lenders.



     (b) Borrower will not, and will not permit any of its Subsidiaries to, engage to any material
extent in any business other than businesses of the type conducted by Borrower and its Subsidiaries
on the date of execution of this Agreement and businesses reasonably related thereto.



     SECTION 6.04 Transactions with Affiliates. Borrower will not, and will not permit
any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or
purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices
and on terms and conditions not less favorable to Borrower or the applicable Subsidiary than could
be obtained on an arm’s-length basis from unrelated third parties and (b) transactions between or
among Borrower and its wholly owned Subsidiaries not involving any other Affiliate.



35









 





ARTICLE VII

Events of Default




     If any of the following events (“Events of Default”) shall occur:



     (a) Borrower shall fail to pay any principal of any Loan when and as the same shall become due
and payable, whether at the due date thereof or at a date fixed for prepayment thereof or
otherwise;



     (b) Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other
than an amount referred to in clause (a) of this Article) payable under this Agreement or
any other Loan Document, when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of five Business Days;



     (c) any representation or warranty made or deemed made by or on behalf of Borrower in or in
connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or
in any report, certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or waiver thereunder,
shall prove to have been materially incorrect when made or deemed made;



     (d) Borrower shall fail to observe or perform any covenant, condition or agreement contained
in Sections 5.01 or 5.09 or in Article VI;



     (e) Borrower shall fail to observe or perform any covenant, condition or agreement contained
in any Loan Document (other than those specified in clause (a), (b) or (d)
of this Article), and such failure shall continue unremedied for a period of 30 days after the
earlier of (i) Borrower becoming aware of such failure and (ii) notice thereof from the
Administrative Agent to Borrower (which notice will be given at the request of any Lender);



     (f) any event or condition occurs that enables or permits (with or without the giving of
notice, the lapse of time or both) the holder or holders of any Material Indebtedness of Borrower
(but not of any Subsidiary of Borrower) or any trustee or agent on its or their behalf to cause any
such Material Indebtedness of Borrower to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity;



     (g) any event or condition occurs that results in any Material Indebtedness becoming due prior
to its scheduled maturity (other than the voluntary prepayment, repurchase, redemption or
defeasance thereof);



     (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed
seeking (i) liquidation, reorganization or other relief in respect of Borrower or any of its
Material Subsidiaries or the debts, or of a substantial part of the assets, of any of them under
any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter
in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Borrower or any of its Material Subsidiaries or for a substantial part of the
assets of



36









 




any of them, and, in any such case, such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing shall be entered;




     (i) Borrower or any of its Material Subsidiaries shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief under any Federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Article, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official
for Borrower or any of its Material Subsidiaries or for a substantial part of its assets, (iv) file
an answer admitting the material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose
of effecting any of the foregoing;



     (j) Borrower or any of its Material Subsidiaries shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;



     (k) one or more judgments for the payment of money in an aggregate amount in excess of
$20,000,000 (exclusive of amounts covered by insurance) shall be rendered against Borrower or any
of its Material Subsidiaries and the same shall remain undischarged for a period of 45 consecutive
days during which execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of Borrower or any of its Material
Subsidiaries to enforce any such judgment;



     (l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when
taken together with all other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;



     (m) a Change in Control shall occur;



then, and in every such event (other than an event described in clause (h) or (i)
of this Article), and at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required Lenders shall, by notice to Borrower,
take either or both of the following actions, at the same or different times:  (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans
then outstanding to be due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued interest thereon
and all fees and other obligations of Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Borrower; and in case of any event described in clause (h) or (i)
of this Article, the Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other obligations of Borrower
accrued hereunder, shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by Borrower.



37









 





ARTICLE VIII

The Administrative Agent




     Each of the Lenders hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers
as are delegated to the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.



     The bank serving as the Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Borrower or any of its Subsidiaries or any of its
other Affiliates as if it were not the Administrative Agent hereunder.



     The Administrative Agent shall not have any duties or obligations except those expressly set
forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c)
except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any
duty to disclose, and shall not be liable for the failure to disclose, any information relating to
Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as
Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not
be liable for any action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross negligence or
willful misconduct, BUT REGARDLESS OF THE PRESENCE OF ORDINARY NEGLIGENCE. The Administrative
Agent shall not be deemed to have knowledge of any Default unless and until written notice thereof
is given to the immediate officers of the Administrative Agent responsible for this Agreement by
Borrower or a Lender and is called a “notice of default”, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent.



     The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by telephone



38









 




and believed by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for
Borrower), independent accountants and other experts selected by it, and shall not be liable for
any action taken or not taken by it in accordance with the advice of any such counsel, accountants
or experts.




     The Administrative Agent may perform any and all its duties and exercise its rights and powers
by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the preceding paragraphs
shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any
such sub-agent, and shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as Administrative Agent.



     Subject to the appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may (and, in the event (i) neither the Administrative
Agent nor any Affiliate, as a Lender, has any outstanding Loans and (ii) the Required Lenders so
request, the Administrative Agent shall) resign at any time by notifying the Lenders and Borrower.
Upon any such resignation, the Required Lenders shall have the right to appoint a successor, with
the prior written consent of Borrower (unless an Event of Default shall have occurred which is
continuing, in which event Borrower’s consent shall not be required). If no successor shall have
been so appointed by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which
shall be a bank with an office in New York City, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder. The fees payable by Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and
such successor. After the Administrative Agent’s resignation hereunder, the provisions of this
Article and Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as Administrative Agent.



     Each Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon the Administrative
Agent or any other Lender and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or related agreement or any document furnished
hereunder or thereunder.



39









 





ARTICLE IX

Miscellaneous




     SECTION 9.01 Notices.



     (a) Except in the case of notices and other communications expressly permitted to be given by
telephone (and subject to paragraph (b) below), all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:




     (i) if to Borrower, to 16740 Hardy Street, Houston, Texas 77205-0068, Attention:
Margaret Dorman  (Telecopy No. 281-233-5505);




     (ii) if to the Administrative Agent, to Fortis Bank S.A./N.V., New York Branch, Loan
Administration, 101 Hudson Street, 21st Floor, Jersey City, NJ 07302, Attention: Maria Pina
(Telecopy No. 201-631-8181), with a copy to Fortis Bank SA/NV, New York Branch, 520 Madison
Avenue, New York, New York 10022, Attention: Joe Maxwell (Telecopy No. 212-340-5370); and




     (iii) if to any other Lender, to it at its address (or telecopy number) set forth in
its Administrative Questionnaire.



     (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent; provided
that the foregoing shall not apply to notices pursuant to Article II unless otherwise
agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or Borrower
may, in its discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that approval of such
procedures may be limited to particular notices or communications.



     (c) Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and other
communications given to any party hereto in accordance with the provisions of this Agreement shall
be deemed to have been given on the date of receipt.



     SECTION 9.02 Waivers; Amendments.



     (a) No failure or delay by the Administrative Agent or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Administrative Agent and the
Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document
or consent to any departure by Borrower therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall
be effective only in the specific instance and



40









 







for the purpose for which given. Without limiting
the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have had notice or
knowledge of such Default at the time.



     (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may
be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or
agreements in writing entered into by Borrower and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and Borrower, in each case with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Term Loan Commitment or the Bridge
Loan Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of
payment of the principal amount of any Loan, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled
date of expiration of any Commitment, without the written consent of each Lender affected thereby,
(iv) change Section 2.16(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby, without the written consent of each Lender, (v) change any of
the provisions of this Section or the definition of “Required Lenders” or any other provision of
any Loan Document specifying the number or percentage of Lenders required to waive, amend or modify
any rights thereunder or make any determination or grant any consent thereunder, without the
written consent of each Lender, or (vi) terminate or modify any indemnity provided to a Lender
hereunder or under any other Loan Document without the written consent of such Lender; provided
further that no such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent without the prior written consent of the Administrative Agent.



     SECTION 9.03 Expenses; Indemnity; Damage Waiver.



     (a) Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements
of counsel for the Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated) and (ii) all out-of-pocket expenses incurred
by the Administrative Agent or any Lender, including the fees, charges and disbursements of any
counsel for the Administrative Agent or any Lender, in connection with the enforcement or
protection of its rights in connection with the Loan Documents, including its rights under this
Section, or in connection with the Loans made hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such Loans.



     (b) Borrower shall indemnify the Administrative Agent and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an “Indemnitee”) against,
and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel for any



41









 







Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result
of (i) the execution or delivery of any Loan Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Loan Documents of their respective
obligations thereunder or the consummation of the Transactions or any other transactions
contemplated hereby or the enforcement of any obligations hereunder or under any of the other Loan
Documents, (ii) any Loan or the use of the proceeds therefrom, (iii) any actual or alleged presence
or release of Hazardous Materials on or from any property currently or formerly owned or operated
by Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory and regardless of whether any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses resulted from the gross negligence or willful
misconduct of such Indemnitee (or any of its Related Parties), BUT THE PRESENCE OF ORDINARY
NEGLIGENCE SHALL NOT AFFECT THE AVAILABILITY OF SUCH INDEMNITY.



     (c) To the extent that Borrower fails to pay any amount required to be paid by it to the
Administrative Agent under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to the Administrative Agent such Lender’s pro rata share (determined as of
the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted against the
Administrative Agent in its capacity as such. For purposes hereof, a Lender’s “pro rata share”
shall be determined based upon (without duplication) its share of the sum of the total outstanding
Loans at the time.



     (d) To the extent permitted by applicable law, neither Borrower nor any of its Subsidiaries
shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions or any Loan or the use of the proceeds thereof.



     (e) All amounts due under this Section shall be payable not later than three Business Days
after written demand therefor.



     SECTION 9.04 Successors and Assigns.



     (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby, except that (i) no
Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or transfer by Borrower without
such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants (to the extent provided in
paragraph (c) of this Section) and, to the extent expressly contemplated



42









 







hereby, the
Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.



     (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender
may assign to one or more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of the Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld) of: (A) Borrower, provided that no consent
of Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved
Fund (as defined below) or, if an Event of Default has occurred and is continuing, any other
assignee; and (B) the Administrative Agent, provided that no consent of the Administrative Agent
shall be required for an assignment to an assignee that is a Lender immediately prior to giving
effect to such assignment or an Affiliate of such a Lender.



     (ii) Assignments shall be subject to the following additional conditions: (A) except in the
case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire
remaining amount of the assigning Lender’s Loans, neither the amount of the Loans retained by the
assigning Lender nor the amount of the Loans being assigned (in each case, determined as of the
date the Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall be less than the Minimum Hold Amount unless Borrower and the
Administrative Agent otherwise consent (such consents not to be unreasonably withheld), provided
that no such consent of Borrower shall be required if an Event of Default has occurred and is
continuing; (B) each partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement; (C) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500; (D) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and (E) in the
case of an assignment to a CLO (as defined below), the assigning Lender shall retain the sole right
to approve any amendment, modification or waiver of any provision of this Agreement, provided that
the Assignment and Assumption between such Lender and such CLO may provide that such Lender will
not, without the consent of such CLO, agree to any amendment, modification or waiver described in
the first proviso to Section 9.02(b) that affects such CLO.


For the purposes of this Section 9.04(b), the terms “Approved Fund” and “CLO” have the
following meanings:





     “Approved Fund” means (a) a CLO and (b) with respect to any Lender that is a
fund which invests in bank loans and similar extensions of credit, any other fund that
invests in bank loans and similar extensions of credit and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.




     “CLO” means any entity (whether a corporation, partnership, trust or otherwise)
that is engaged in making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and is administered or
managed by a Lender or an Affiliate of such Lender.



     (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of
this



43









 







Section, from and after the effective date specified in each Assignment and Assumption the
assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and
the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment
and Assumption, be released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.14, 2.15, 2.16 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with paragraph
(e) of this Section.



     (iv) The Administrative Agent, acting for this purpose as an agent of Borrower, shall maintain
at one of its offices a copy of each Assignment and Assumption delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, absent manifest error,
and Borrower, the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be available for
inspection by Borrower and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.



     (v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee
shall already be a Lender hereunder), the processing and recordation fee referred to in
paragraph (b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register. No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the Register as provided in
this paragraph.



     (c) (i) Any Lender may, without the consent of any Borrower or the Administrative Agent, sell
participations to one or more banks or other entities (a “Participant”) in all or a portion
of such Lender’s rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (C) Borrower, the Administrative Agent and
the other Lenders shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement, and (D) no such participation may be
sold to any entity which is engaged principally in the oilfield products and services business
unless Borrower shall have given its prior written consent. Any agreement or instrument pursuant
to which a Lender sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or waiver of any
provision of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any amendment, modification
or waiver described in the first proviso to Section 9.02(b) that affects



44









 







such Participant.
Subject to paragraph (c)(ii) of this Section, Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same
extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph
(b) of this Section. To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 9.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.16(c) as though it were a Lender.



     (ii) A Participant shall not be entitled to receive any greater payment under Section
2.13 or 2.15 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the participation to such
Participant is made with Borrower’s prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 2.15 unless
Borrower is notified of the participation sold to such Participant and such Participant agrees, for
the benefit of Borrower, to comply with Section 2.15(e) as though it were a Lender.



     (d) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.



     SECTION 9.05 Survival. All covenants, agreements, representations and warranties
made by Borrower in the Loan Documents and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the execution and delivery of
the Loan Documents and the making of any Loans, regardless of any investigation made by any such
other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may
have had notice or knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement
is outstanding and unpaid. The provisions of Sections 2.13, 2.14, 2.15
and 9.03 and Article VIII shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans,
the expiration or termination of the Commitments or the termination of this Agreement or any
provision hereof.



     SECTION 9.06 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different counterparts), each of which
shall constitute an original, but all of which when taken together shall constitute a single
contract. This Agreement, the other Loan Documents and any separate letter agreements with respect
to fees payable to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties hereto, and



45









 







thereafter
shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement
by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.



     SECTION 9.07 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality
and enforceability of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.



     SECTION 9.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other obligations at any
time owing by such Lender or Affiliate to or for the credit or the account of Borrower against any
of and all the obligations of Borrower now or hereafter existing under this Agreement held by such
Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement
and although such obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff) which such Lender may
have.



     SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process.



     (a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE
OF NEW YORK.



     (b) Borrower hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or relating to any
Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent permitted by law,
in such Federal court. Each of the parties hereto agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan
Document shall affect any right that the Administrative Agent or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or any other Loan Document against
Borrower or its properties in the courts of any jurisdiction.



     (c) Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Agreement or any other
Loan Document in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court.



46









 





     (d) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9.01. Nothing in this Agreement or any other Loan Document
will affect the right of any party to this Agreement to serve process in any other manner permitted
by law.



     SECTION 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.



     SECTION 9.11 Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and shall not affect
the construction of, or be taken into consideration in interpreting, this Agreement.



     SECTION 9.12 Confidentiality. Each of the Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the extent required by
any regulatory authority, (c) to the extent required in the opinion of legal counsel by applicable
laws or regulations or by any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section, to (i) any
assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights
or obligations under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to Borrower and its obligations, (g) with
the consent of Borrower or (h) to the extent such Information (i) becomes publicly available other
than as a result of a breach of this Section or (ii) is disclosed to the Administrative Agent or
any Lender on a nonconfidential basis by a source other than Borrower, which disclosure is not the
result of a breach of a duty of confidentiality owed by the discloser to Borrower if such breach
was reasonably discoverable by the Administrative Agent or the applicable Lender, as the case may
be. For the purposes of this Section, “Information” means all information received from
Borrower relating to Borrower or its business, other than any such information that is known to the
Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by Borrower. Any
Person required to maintain the confidentiality of Information as provided in this




47












 




Section shall be
considered to have complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such Person would accord to
its own confidential information.




     SECTION 9.13 Interest Rate Limitation. Borrower and the Lenders intend to strictly
comply with all applicable federal and New York laws, including applicable usury laws (or the usury
laws of any jurisdiction whose usury laws are deemed to apply to the Notes or any other Loan
Documents despite the intention and desire of the parties to apply the usury laws of the State of
New York). Accordingly, the provisions of this Section shall govern and control over every other
provision of this Agreement or any other Loan Document which conflicts or is inconsistent with this
Section, even if such provision declares that it controls. As used in this Section, the term
“interest” includes the aggregate of all charges, fees, benefits or other compensation which
constitute interest under applicable law, provided that, to the maximum extent permitted by
applicable law, (a) any non-principal payment shall be characterized as an expense or as
compensation for something other than the use, forbearance or detention of money and not as
interest, and (b) all interest at any time contracted for, reserved, charged or received shall be
amortized, prorated, allocated and spread, using the actuarial method, during the full term of the
Notes. In no event shall Borrower or any other Person be obligated to pay, or any Lender have any
right or privilege to reserve, receive or retain, (a) any interest in excess of the maximum amount
of nonusurious interest permitted under the laws of the State of New York or the applicable laws
(if any) of the United States or of any other jurisdiction, or (b) total interest in excess of the
amount which such Lender could lawfully have contracted for, reserved, received, retained or
charged had the interest been calculated for the full term of the Notes at the Ceiling Rate. The
daily interest rates to be used in calculating interest at the Ceiling Rate shall be determined by
dividing the applicable Ceiling Rate per annum by the number of days in the calendar year for which
such calculation is being made. None of the terms and provisions contained in this Agreement or in
any other Loan Document (including, without limitation, Article VII hereof) which directly
or indirectly relate to interest shall ever be construed without reference to this Section, or be
construed to create a contract to pay for the use, forbearance or detention of money at any
interest rate in excess of the Ceiling Rate. If the term of any Note is shortened by reason of
acceleration or maturity as a result of any Default or by any other cause, or by reason of any
required or permitted prepayment, and if for that (or any other) reason any
Lender at any time, including but not limited to, the stated maturity, is owed or receives
(and/or has received) interest in excess of interest calculated at the Ceiling Rate, then and in
any such event all of any such excess interest shall be canceled automatically as of the date of
such acceleration, prepayment or other event which produces the excess, and, if such excess
interest has been paid to such Lender, it shall be credited pro tanto against the then-outstanding
principal balance of Borrower’s obligations to such Lender, effective as of the date or dates when
the event occurs which causes it to be excess interest, until such excess is exhausted or all of
such principal has been fully paid and satisfied, whichever occurs first, and any remaining balance
of such excess shall be promptly refunded to its payor.



     SECTION 9.14 Syndication Agents and Documentation Agents. The entities named as
Syndication Agents and Documentation Agents hereunder, in such capacities, shall have no rights,
powers, duties, obligations or liabilities under this Agreement or any of the other Loan Documents,
but to the extent that for any reason any Person makes a claim against entities, in



48









 







their
capacities as Syndication Agents or Documentation Agents and not as a Lender, the indemnification
provisions in Article VIII and in Section 9.03 shall apply.



     SECTION 9.15 USA Patriot Act. Each Lender that is subject to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the
“Act”) hereby notifies Borrower that pursuant to the requirements of the Act, it is
required to obtain, verify and record information that identifies Borrower, which information
includes the name and address of Borrower and other information that will allow such Lender to
identify Borrower in accordance with the Act.



49









 





     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.



	 	 	 	 	 
	 	SMITH INTERNATIONAL, INC.,

a Delaware corporation

 	 
	 	By:  	/s/
Margaret K. Dorman 	 
	 	 	Margaret K. Dorman, Sr. Vice President, 	 
	 	 	Chief Financial Officer and Treasurer 	 
	 



[Signature Pages to Credit Agreement]





 









 





	 	 	 	 	 	 	 
	 	 	FORTIS BANK SA/NV, NEW YORK BRANCH,
 individually and
as Administrative Agent, Co-Lead Arranger and Joint
Bookrunner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ John G. Sullivan 	 	 
	 

	 	Name:
	 	John G. Sullivan 

	 	 
	 

	 	Title:
	 	Managing
Director 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Diran Cholakian 	 	 
	 

	 	Name:
	 	Diran Cholakian 

	 	 
	 

	 	Title:
	 	Director 

	 	 
	 

	 	 	 	 

	 	 






 









 






	 	 	 	 	 	 	 
	 	 	CALYON NEW YORK BRANCH,

individually and as Co-Documentation Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Darrell Stanley 	 	 
	 

	 	Name:
	 	Darrell Stanley 

	 	 
	 

	 	Title:
	 	Managing
Director 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Michael D. Willis 	 	 
	 

	 	Name:
	 	Michael D. Willis 

	 	 
	 

	 	Title:
	 	Director 

	 	 
	 

	 	 	 	 

	 	 






 









 






	 	 	 	 	 	 	 
	 	 	THE ROYAL BANK OF SCOTLAND PLC,

individually and as Co-Documentation Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Brian Williams 	 	 
	 

	 	Name:
	 	Brian Williams 

	 	 
	 

	 	Title:
	 	Vice
President 

	 	 
	 

	 	 	 	 

	 	 






 









 






	 	 	 	 	 	 	 
	 	 	DNB NOR BANK ASA,

individually, as Co-Documentation Agent and as


Co-Lead Arranger and Joint Bookrunner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Nikolai A. Nachamkin 	 	 
	 

	 	Name:
	 	Nikolai A. Nachamkin 

	 	 
	 

	 	Title:
	 	Senior
Vice President 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Cathleen Buckley 	 	 
	 

	 	Name:
	 	Cathleen Buckley 

	 	 
	 

	 	Title:
	 	Vice
President 

	 	 
	 

	 	 	 	 

	 	 






 









 






	 	 	 	 	 	 	 
	 	 	WELLS FARGO BANK, N.A.,
 individually and as
Syndication Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Donald W. Herrick, Jr. 	 	 
	 

	 	Name:
	 	Donald W. Herrick, Jr. 

	 	 
	 

	 	Title:
	 	Vice
President 

	 	 
	 

	 	 	 	 

	 	 






 









 






Schedule 1.01




	 	 	 	 	 	 	 
	 	 	Borrower Index	 	ABR	 	Adjusted LIBO
	 	 	Debt Ratings of	 	Applicable	 	Applicable
	Category	 	S&P/Moody’s	 	Margin	 	Margin
	1
	 	A/A2
	 	0
	 	0.50%
	 	 	 	 	 	 	 
	2
	 	A-/A3
	 	0
	 	0.60%
	 	 	 	 	 	 	 
	3
	 	BBB+/Baa1
	 	0
	 	0.70%
	 	 	 	 	 	 	 
	4
	 	BBB/Baa2
	 	0
	 	1.00%
	 	 	 	 	 	 	 
	5
	 	BBB-/Baa3
	 	0
	 	1.25%
	 	 	 	 	 	 	 
	6
	 	BB+/Ba1 or Lower
	 	0
	 	2.00%